Financial Experts Recommend This Paycheck-to-Paycheck Budget

The 50/30/20 method is the best form of paycheck-to-paycheck budget. Why do you need it? Living paycheck to paycheck isn't anybody's idea of a dream life. But you can break free from this cycle using the 50/30/20 strategy. It allows you to cover all your bills, buy your food, and save for your future. And once you get into the habit of this top-tier budgeting strategy, it becomes much easier.

We'll talk you through everything you need to know about this method before divulging an easy way to get money when you're in a real pinch.

Everything You Need To Know About The 50/30/20 Paycheck-To-Paycheck Budget

The 50/30/20 paycheck allocation rule is popular for a reason — it works. Following this method, you'd split your paycheck like this:

• 50% Essentials — Half of your wages should go on regular expenses like groceries and bills. Think utilities, rent, mortgage, oil, and more.
  
  
• 30% Entertainment — This includes dining at a restaurant and getting a takeout, as well as trips to the cinema and other unnecessary (but fun) activities.
  
  
• 20% Savings — Whether you're saving for retirement or want to bolster your emergency fund, 20% of your paycheck will go toward that goal. It doesn't matter how much or how little the figure is; the point is that you're saving something.

But let's look at each a little closer.

1. Stick To 50% For Essentials

One-half of your paycheck (before taxes) should go toward things like rent, groceries, and bills. Our favorite trick is to remove the amount from your main account as soon as it's deposited. That way, you can rest easy knowing your needs are met.

That said, you might need to allocate a larger percentage for essentials, depending on where you reside. After all, some regions (especially popular cities or tourist destinations) have higher costs of living.

2. Dedicate One Fifth To Savings

No matter whether they're long- or short-term, 20% of your paycheck-to-paycheck budget should be saved for future financial needs or goals. The first half of this 20% (i.e., 10% of your total pay) should go toward your retirement. To get the most from it, contribute enough to maximize your employer's match (if they provide one). You'll be better equipped to deal with inflation as you near your twilight years. The other half of the 20% needs to be used for paying off debts or reaching another financial goal.

Most financial experts recommend starting with an emergency fund, ensuring your financial safety if life decides to turn things upside down. However, don't be tempted to set unrealistic goals. It will only dampen your spirits. Instead, aim to save $1,000. Once you reach that target, create a new goal for one month's expenses.

As you cross the $1,000 threshold, you might want to think about splitting your allocation to 2% for your emergency fund and 8% for credit cards. We recommend keeping your emergency fund in a separate bank than your checking account. That way, you won't be tempted to dip into it when you feel like being a bit impulsive.

3. Leave The Rest For Luxuries

The trick here will probably surprise you — don't track your expenses. While that probably goes against everything you thought you knew about a paycheck-to-paycheck budget, not tracking is a surefire way to stick to this goal. After all, monitoring every outgoing dollar is tedious, and you won't keep up with something you despise.

Experts encourage people to think about financial planning as a behavior rather than numbers. You simply need to adjust your thinking — from spending over saving-to-saving overspending! As we mentioned earlier, remove the money you need for living costs and savings to separate accounts, leaving your "spending money" in your checking account.

What Happens If Emergency Strikes? Get An Installment Loan

Unfortunately, you could run into financial difficulty before you've enacted the 50/30/20 rule and built up a significant emergency fund. But all hope isn't lost. You can obtain an online installment loan from us at Missouri Title Loans, Inc. We lend up to $1,500 to help cover your crisis. To gain approval, you need a valid state identification, checking account statement, and pay stub.

Once you've completed our online form, the approval portion takes a mere half an hour, allowing your life to return to normal in no time. Provided you're happy with the loan amount we offer, you'll sign the paperwork before receiving your money on the same or the next working day.

Fund Your Crisis With An Installment Loan Today!

It's never too late to start a paycheck-to-paycheck budget using the 50/30/20 rule! But if an emergency strikes beforehand, an installment loan from us is always an option. Besides, you can avoid spending much time researching ‘installment loans near me’ online, get connected to the nearest location within minutes, and discuss all the nuances with one of our agents over the phone. Just fill out the form to begin.

Note: The content provided in this article is only for informational purposes, and you should contact your financial advisor about your specific financial situation.